A Moonshot Without Innovation?
By Michael Hodin
The success of President Biden’s recently unveiled Cancer Moonshot depends on accelerating the development of new treatments against a disease that kills over 600,000 Americans every year. It’s a laudable goal and a deeply felt cause for the president. Yet until his administration stops shackling private sector innovation with counterproductive policies, this moonshot will struggle to get off the launching pad.
Exhibit A is the sweeping new power granted to the Centers for Medicare and Medicaid Services (CMS) to “negotiate” prices on leading drugs. Companies that don’t accept CMS’s price face punishments of up to a 95% tax on drug sales. If the federal government makes drug companies “an offer they can’t refuse,” that’s not negotiation, it’s price controls. And price controls have a dismal record when it comes to spurring pharmaceutical innovation.
As recently as the early 1990s, Europe outpaced the U.S. in biopharmaceutical R&D investment. But as Europe steadily ratcheted up drug price controls, the U.S. seized the leadership role.
A 2020 study by ndp analytics found that in 1990, Europe was responsible for 59% of the two regions’ combined R&D investment compared to 41% for the US. By 2017, those figures had flipped to over 58% for the U.S. vs. about 42% for Europe. The European Commission dourly summed up this reversal of fortune: “Europe is lagging behind the U.S. in its ability to generate, organize, and sustain innovation processes and productivity growth in pharmaceuticals.”
R&D investment is a key driver of scientific discovery and innovation. Leadership in drug R&D and scientific innovation have turned the U.S. into “the medicine chest of the world”, according to researchers Michael Rosenblatt and Henri Termeer. They calculate that two-thirds of new drugs introduced in the past decade — more than Europe and Japan combined — and 80% of new treatments in the pharmaceutical pipeline originate in the U.S.
Price controls not only punish investment, they also deny patients access to the latest therapeutic breakthroughs. Of the 54 new cancer drugs launched between 2013 and 2017, over 94% are available to patients in the U.S., compared to just 72% in Germany, 43% in France, 31% in Japan, and less than 4% in China. Access to the latest treatments is a major reason why the U.S. is a global leader in cancer survival rates.
There is a stunning gap between the president’s vision of a cancer moonshot and the administration’s day-to-day policies. But there are three steps President Biden can take to put his ambitious program on better policy ground.
First, make peace with “Big Pharma” by starting a dialogue. By inviting CEOs to the White House, the administration can discuss how decisions are made to invest the billions we will need to develop innovative cures not only for cancer, but other diseases. The diseases of aging societies — from cancer and Alzheimer’s to bone health and diabetes — will bankrupt America unless innovative treatments are developed. Treating the biopharma industry as partners rather than political targets will go a long way toward the president’s pledge to “organize and measure the best of our energies and skills to end cancer as we know it.”
Second, take the high road in implementing Medicare price negotiations. The Administration won the political battle, but it will lose the cancer and all other biomedical innovation wars unless the president directs CMS leadership to take into account how its “price negotiations” will impact patients, healthy aging, equity, and innovation itself. Hold the regulators at least as accountable as the innovators.
Third, rethink giving away American innovation by waiving patents on the Covid-19 vaccines. Intellectual property is the heart of America’s competitive advantage and the foundation for innovation that will be needed on a massive scale for this cancer moonshot to succeed. It may sound laudable to give away our IP, especially in recognized crises like Covid-19. But the consequences are to so disrupt the innovation process by signaling there is not the incentive for the investments and therefore actually hurt the very people we think we might be helping. And precisely because a policy action towards Covid-19 is so highly visible, it will signal to all other investors and potential innovators that the game has changed — we no longer respect your intellectual property rights!
President Biden has summoned the scientific community, medical researchers, and the private sector to “get in the game” and bring forth bold thinking and new treatments to the fight against cancer. Can he match his inspiring rhetoric with equally bold policies that can accelerate new cancer breakthroughs and strengthen American’s hard-won competitive advantage in pharmaceutical research and development?
